Retirees are entitled to interest on delayed retiral benefits; treasury or administrative delay does not defeat State liability.

The respondent-plaintiff served the Punjab Government from 25.08.1983 until his superannuation on 31.10.2015.

No departmental proceedings were pending against him, and the Court found that there was no fault on his part in completing the formalities for release of his retiral benefits.

His pension, leave encashment, GPF, Group Insurance and gratuity were released belatedly on 02.04.2016, 14.03.2016, 08.03.2016, 21.05.2016 and 05.07.2016 respectively.

He instituted a suit seeking interest at 18% per annum on the delayed payments after serving notice under Section 80 CPC.

The trial Court partly decreed the suit and awarded interest at 9% per annum.

The first appellate Court dismissed the State’s appeal and affirmed the decree, subject to clarification of the applicable period of interest.

In the Regular Second Appeal, the State challenged the award of interest, contending that the delay was attributable to the Treasury Office and, in relation to GPF, to the respondent’s delayed submission of Form PF-10.

The Court separately condoned the delay of 239 days in filing the appeal under Section 5 of the Limitation Act, 1963.

Whether the respondent-plaintiff was entitled to interest on the delayed release of his pension, GPF, Group Insurance and leave encashment, notwithstanding the State’s contention that the delay occurred at the Treasury level?

Whether interest on delayed payment of gratuity was governed by Rule 9.13 of the Punjab Civil Services Rules, Volume II, and therefore payable only after expiry of three months from the date of retirement?

Whether the respondent’s alleged delay in submitting Form PF-10 disentitled him from claiming interest on delayed payment of GPF?

Rule 9.13 of the Punjab Civil Services Rules, Volume II provides that where gratuity is authorised after three months from the date it becomes due, and the delay is attributable to an administrative lapse rather than the employee, interest is payable for the period beyond three months at the rate applicable to GPF deposits.

In A.S. Randhawa v. State of Punjab, the Court held that pension and retiral benefits are valuable rights and should ordinarily be disbursed within two months of retirement; culpable or unjustified delay by the State ordinarily attracts interest.

J.S. Cheema v. State of Haryana recognised interest as compensation for the State’s retention and use of money belonging to the employee, even where negligence is not conclusively established.

Relying on Tahazhathe Purayi Sarabi v. Union of India, the Court reiterated that interest is compensatory for deprivation of the use of money lawfully due.

The Court held that the evidence, particularly the cross-examination of the State’s witness, established that the respondent had not delayed the processing of his retiral benefits and that no departmental inquiry or other impediment existed at the time of retirement.

The fact that the Treasury Office failed to release payment, or returned the bills because of financial-year closure or objections, did not justify withholding the employee’s benefits; such administrative delay could not be attributed to the respondent.

The alleged delay in submitting Form PF-10 was also not held against him because the department had failed to inform him of the requirement, and he submitted the form promptly after being apprised of it.

Applying Rule 9.13, the Court held that gratuity interest could begin only after the statutory three-month period, at the applicable GPF rate of 8.7% per annum for 2015–16.

For the other retiral benefits, applying A.S. Randhawa, the Court treated two months from retirement as the reasonable period for disbursement and upheld entitlement to compensatory interest thereafter.

The respondent was held entitled to interest on gratuity at 8.7% per annum, under Rule 9.13, from the expiry of three months from 31.10.2015 until actual payment.

In respect of pension, GPF, Group Insurance and leave encashment, he was held entitled to interest at 9% per annum from the expiry of two months from retirement until actual payment.

The delay of 239 days in filing the appeal was condoned, pending miscellaneous applications were disposed of, and the decree sheet was directed to be prepared.